Who Prepares the Budget and the Steps Involved?

The Indian Union Budget is prepared by the Ministry of Finance in consultation with Niti Aayog and other concerned ministries. Also, the Budget division of the department of economic affairs (DEA) in the finance ministry is the nodal body responsible for producing the Budget.

Budget-making process starts in August-September, that is, about six months prior to its date of presentation. It needs to be passed by both houses of Parliament before beginning of the financial year, that is, April 1.

Steps for preparing the Union Budget:

  • Firstly, the circular is issued to all ministries, states, Union territories, autonomous bodies by the finance ministry asking them to prepare estimates for the coming year.
  • Then the circular comprises skeleton forms along with requisite guidelines based on which ministries present their demands.
  • Apart from providing their estimates, the ministries also give a detail of their revenues and expenditures in the past year.
  • After requests are received, they are scrutinised by the top officials of the government and extensive consultations are undertaken between the ministries and the department of expenditures. Upon approval, the data is then sent to the financial ministry.
  • The finance ministry, after going through all recommendation allocates revenues to various departments for their future expenditures.
  • The finance minister holds pre-Budget meetings with various stakeholders to know about their proposals and demand and these stakeholders include state representatives, bankers, agriculturist, economists and trade unions.
  • Once the pre-Budget consultations are done, the finance minister takes the final call on demands and it is also discussed with the PM before finalisation.